Marsh & Parsons:

Record January for the Prime London Property Market

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  • Almost half (48%) of Prime London property sold for, or in excess of, the asking price
  • Over a third (34%) of property in January sold within two weeks of being put on the market
  • Ratio of supply and demand rose to a four-year high with 23 registered buyers for each available property
  • Strong demand is pushing prices higher, with the average price of two-bedroom properties in Outer Prime London increasing by 17% in 2013, an increase of almost £100,000

 

The Prime London market experienced a bumper January in 2014, with properties selling in record time and for closer to the asking price than ever before, according to new data from estate agent Marsh & Parsons.

 

Over a third (34%) of property in January was sold within two weeks of being put on the market – twice as many properties in this timeframe compared to January 2013.

 

In addition, almost half (48%) of all property in January sold for, or in excess of, the asking price. This meant that, on average across all property sold, 99% of the asking price is currently being achieved – an increase from 98% during the past two years.

 

Peter Rollings, CEO at Marsh & Parsons, commented: “Now is the time to get a jackpot price on property thanks to a surge of potential buyers entering the market in the New Year. These extraordinary conditions have created a strong seller’s market and one of the best opportunities to sell property in recent years.

 

“But conditions like this won’t last. Many people believe that the best time to market property is during the busier months of the spring. But these sellers could be missing a trick – the increasing levels of property supply at that time of year will dissipate current levels of demand, and bring about a return to more normal market conditions in the spring.”

 

Supply and Demand

 

In January, there were 23 registered buyers competing for each available property on Marsh & Parsons’ books. This was the highest level since 2010, and represents a dramatic increase from the ratio of 14 registered buyers per property in January 2013.  Compared to the same point last year, 19% more buyers entered the market in competition for 28% fewer properties – making this a strong seller’s market.

 

But for the last four years, an average of 10% more property has become available between the months of January and April.  This percentage jumped considerably between 2012 and 2013 as the property market recovered, and if this trend continues, 18% more property could hit the market by spring 2014.

 

Peter Rollings continued: “London’s rising population, together with a perfect combination of low interest rates and competitive mortgage finance has created a surge of potential buyers. But the supply of housing stock has remained more subdued. Our more astute sellers are putting their properties on the market now because they know that the imbalance of supply and demand will help them to get a great price.

 

“In a seller’s market, property regularly goes for over the asking price, so buyers need to be realistic when viewing property and placing bids. When they find their chosen property, they must not delay. Being decisive is key to successful negotiations.”

 

Impact on Prices

 

The average value of two-bedroom properties in Outer Prime London increased by nearly £100,000 during 2013 following a 17% annual growth, according to Marsh & Parsons’ latest London Property Monitor.

The average value of two-bedroom properties in Outer Prime London increased by nearly £100,000 during 2013 following a 17% annual growth, according to Marsh & Parsons’ latest London Property Monitor.

 

The average price of a two-bedroom property in Outer Prime London – comprising non-central areas such as Brook Green, Fulham and Barnes – now stands at £673,812. This is an increase of £98,214 since Q4 2012, when the average price of a two-bed in these areas was £575,597.

 

The average price of a two-bedroom property in Outer Prime London – comprising non-central areas such as Brook Green, Fulham and Barnes – now stands at £673,812. This is an increase of £98,214 since Q4 2012, when the average price of a two-bed in these areas was £575,597.

 

Property Type Breakdown

   

All Prime London

Prime Central London

Outer Prime London

1 Bed

 £     520,076

 £        599,131

 £        470,668

2 Bed

 £     939,839

 £     1,365,482

 £        673,812

3 Bed

 £  1,577,109

 £     2,362,956

 £     1,004,493

4 Bed

 £  2,024,000

 £     2,979,556

 £     1,426,778

 

 

Looking at average values across all property types, growth in Outer Prime London outpaced Prime Central London by 50% during 2013, with annual growth of 15%, compared to annual growth of 10% in the Prime Central areas of Chelsea, Kensington, Notting Hill, Holland Park and Pimlico.

 

The top five Outer Prime ‘hotspots’, where the highest levels of growth were recorded during 2013 were: Barnes (average annual price growth of 19%), Balham, Clapham, Fulham (all 18% annual growth), and Battersea (15% annual growth). 

 

Peter Rollings continued: “Last year the biggest price increases were to be found in the Outer Prime London ‘villages’. These areas are all popular with UK buyers and are favoured for their community feel and local atmospheres. Slightly lower property prices in these areas also attract those who may have been priced out of more central areas.

 

“But early indications in January point to a turnaround. While parts of Outer Prime London sped ahead in 2013, our data suggests that Prime Central areas are due for a growth spurt in 2014. This was beginning to happen in the third quarter of last year and looks set to surge forward later this year.”

 

Prime London Property Price Movements

 

Average value

Quarterly Change

Annual Change

Prime London

£ 1,477,699

3.0%

12.3%

Prime Central London

£ 2,108,717

2.3%

10.0%

Outer Prime London

£ 1,083,313

4.0%

15.1%

 

 

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London kitchens – a thing of the past?

Kitchens are shrinking dramatically in size and prominence in new London homes and conversions, according to the latest research from estate agents Marsh & Parsons.

Falling victim to the changing eating habits of modern-day Londoners, kitchens now account for a smaller proportion of the total living space in new build developments and conversions in the capital than ever before.  Today’s London residents are eating out more – up to an average of four times a week in 2013.  This fuelled a boom in the London dining scene last year, with a new restaurant opening for every day of the month at its peak.

Only half of a typical Londoner’s total weekly lunches and dinners are now prepared in kitchens at home.  And as the average size of UK new builds gets smaller, it is the kitchen which is bearing the main brunt of this fall in square footage.

  • Example 1: A two bedroom flat in a Barnes development comes with a kitchen of 6.5 sqm (or 70 sq ft). This is merely 7.9% of the gross internal area of the apartment and roughly half the size of an average car parking space.

http://www.marshandparsons.co.uk/property-for-sale/2-bedroom-Flat-for-sale/Wrenn-House-Brasenose-Drive-London-SW13/BAR130164

  • Example 2: The kitchen is equal to only 7.3% of the property’s entire internal area in a two bedroom, two bathroom Albert Embankment apartment in Prime Central London.  At just 6 sqm (65 sq ft), this shows kitchen size has shrunk by a third since the 1960s, when the average British kitchen in a post-war new build was 8.8 sqm (95 sq ft).

http://www.marshandparsons.co.uk/property-for-sale/2-bedroom-Flat-for-sale/Albert-Embankment-London-SE1/PIM120096

As a result, over a third of residents in new build developments report they don’t have enough space for everyday kitchen appliances such as toasters or microwaves, or to invite guests over for dinner in their home.

Charles Holland, Lead Director of Residential Developments and Investments at Marsh & Parsons, comments: “The whole way we socialise as a city is changing, and marginalising the kitchen as the traditional hub of the home. Aware of the changing lifestyle of our capital’s young professionals, developers of the latest London apartment blocks are prioritising living space, bathrooms and nearly all else over kitchen size.

“Londoners today are increasingly following in the footsteps of New Yorkers, preferring to eat out and meet friends in a restaurant than host dinner parties. As such, kitchen size is no longer as important to many young professional buyers, and is often at the bottom of the pile in property wish lists”.

Marsh and Parsons have identified that among new build properties coming onto the market, separate kitchens are increasingly rare – with open plan kitchen-diners generally the norm.

  • Example 1: A two bedroom flat in a renovation of a former Victorian hospital in Clapham provides only one large open plan reception space to act as combined kitchen, dining and living area.

http://www.marshandparsons.co.uk/new-home-for-sale/2-bedroom-Flat-for-sale/Jeffreys-Road-London-SW4/RDI130042

  • Example 2: A one bedroom apartment in a modern riverside development in Pimlico incorporates a modest galley style kitchen into a single reception room.

http://www.marshandparsons.co.uk/property-for-sale/1-bedroom-Flat-for-sale/Eagle-Wharf-138-Grosvenor-Road-London-SW1V/PIM130001

Peter Rollings, CEO of Marsh & Parsons, comments: “With less and less time spent preparing meals in the home, we are starting to see the kitchen completely disappear as a room in its own right, and instead being subsumed into the wider living and dining space.  Once a means of space-saving in tiny apartment blocks, combined kitchen-diners are now necessary for many house-hunters, and much more practical than a separate kitchen.  Looking to the future, it begs the question whether the London kitchen is about to do a disappearing act on us altogether, or whether it has already ceased to exist as a must-have space?” 

 

News Headlines: Wednesday 15th January

Economics

Yesterday saw the announcement that inflation fell to the government target level of 2% in the last month, for the first time in four years. Inflation came in 0.1% lower than in November 2013, helped by the falling cost of recreational goods and services. But slower inflation was partially offset by an increase in motor fuel process, according to the ONS. (Guardian p.20 Metro p.46)

Personal Finance

Research from housing charity Shelter reveals tens of thousands of people are taking out payday loans to cover their mortgages and rent, with one in 50 using high interest credit in the past year. The charity warned that in total, one in five have use overdrafts, credit cards or cash borrowed from family and friends in order to pay for housing in the last 12 months. Shelter surveyed homeowners on their financial worries, and also discovered that a quarter of people would feel too ashamed to get help with housing repayments. The charity also revealed a 30% increase in calls to its helpline over the past year. (Metro p.4)

Property

Released in tandem with the ONS inflation statistics yesterday, the latest house price index from the ONS showed the price of the average UK house rose 5.4% to £248,000 in the 12 months to November. In London, the price rise was more than double that, with the capital seeing a year-on-year increase of 11.6%.

The Metro reacted to this news by heralding housing misery for first-time buyers, with the average first time buyer forced to pay £187,000 – or 6% more than a year ago. Peter Rollings of Marsh & Parsons said: “House price growth has washed over every corner of the UK” but in the Daily Telegraph, Richard Sexton of e.surv warned: “We desperately need more construction in order to prevent the bottom of the market being priced out entirely.” (Daily Telegraph B4, Metro p.47, Daily Express p.28, Guardian p.21, The Sun p.38, The Times p.35)

The Independent Editorial lead with a sceptical view of the ONS figures, arguing that expensive housing distorts the UK economy: “House-builders find themselves in the spotlight. Housing completions have been abysmally low for decades. And whatever David Cameron says, it is difficult to see the Government’s Help to Buy mortgage subsidies boosting supply sufficiently to keep house prices anchored. That is dangerous.” It argued that ultimately, even middle-class homeowners could ‘lose out’ from rising prices (Independent p.2)

Recruitment/Education

‘Skinflint’ bosses who fail to pay workers the minimum wage will face penalties of up to £20,000 from next month say the government – a £15,000 increase on current fines. Business Secretary Vince Cable also said that ministers had made it easier to ‘name and shame’ bosses paying under the minimum wage, and that all calls to the free pay and work rights help line would be investigated. (Metro p.47)

Marsh & Parsons

2014 FORECAST: LONDON TO SEE HOUSE PRICES RISE BY 5-7%

  • London prices expected to stabilize in 2014 with annual growth of  5-7%
  • Prime London will continue to be a magnet for overseas buyers
  • Business confidence to boost the corporate lettings sectorImage

House Prices

London property prices will continue to dwarf those in the rest of the UK in 2014, but the rate of growth is expected to stabilize, according to estate agent Marsh & Parsons.

They forecast that Prime London house prices will rise by 5-7% in 2014, compared to 10.3% in the last twelve months[1], with the majority of growth expected to take place in the first half of the year.

Peter Rollings, CEO of Marsh & Parsons, comments: “London’s housing market saw a substantial uplift in 2013, and we expect a similarly strong start in 2014 to drive an annual rise in prices – but these won’t be as spectacular as last year. With ongoing support from Government initiatives, the rate of growth will remain sustainable.

“Following improvements in unemployment levels, we’re likely to see modest increases in interest rates next year. But with a general election coming up in 2015, any changes are unlikely to create shockwaves through the housing market.”

Supply and Demand

A lack of supply being met with high demand will continue to drive price increases in the Prime London property market. At the end of 2013, there were 18 registered buyers per available property, compared to 13.5 at the end of 2012[2], and this will ratio will remain high in 2014.

Peter Rollings continues: “Many sellers will remain cautious of putting their property on the market as they are not confident that they will be able to find somewhere to move to, therefore supply is unlikely to improve considerably next year.  As a result, property will continue to sell for close to or at the asking price and we may see our average success rate of 98% of the sale price currently being achieved in Prime London increase even further.[3]

 

Overseas Buyers

Changes in policy announced in George Osborne’s Autumn Statement mean that foreign property owners who sell second homes in the UK will have to pay Capital Gains Tax from April 2015.  But with overseas buyers and foreign nationalities making up just 28% of all Prime London purchases in Q3 2013[4], this change in policy is unlikely to have any dramatic effect on prices in 2014.

Peter Rollings continues: “With the change only being introduced in April 2015, we may find a short-term rush for tax-free sales before the policy comes into effect, helping to boost supply and fluidity at the highest level. However, even with yet more tinkering from the Chancellor, London remains a more attractive and easier place to buy property than many other cities around the world, and providing that the politicians don’t ‘kill the golden goose’, demand for the best properties will remain fierce.”

 

The Rental Market

Based on current trends, Marsh & Parsons expects rents in Prime London to hold steady in 2014, with rises of 2-4% in 2014, as opposed to the generally static rent levels recorded in 2013.

Peter Rollings continues: “The improved economic mood has eased anxiety among city firms and as a result, the corporate lettings sector will flourish next year. Based on current trends, we expect the greatest rental increases to be found in two-bedroom properties in central areas such as Kensington & Chelsea, which are popular locations for visitors from abroad. As competition heats up, void periods will continue to fall, and 2014 tenants will face intense competition for the best properties.”


[1] Annual price in Q3 2013 in Prime London, according to Marsh & Parsons’ latest London Property Monitor

[2] Data from Marsh & Parsons’ London Property Monitor

[3] Marsh & Parsons’ sales data

[4] Marsh & Parsons London Property Monitor, Q3 2013

Value of one-bedroom properties in Prime London rises by over £60,000 in a year

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  • One-bedroom properties in Prime London have appreciated by 6% in the last quarter, and by 14% in the last year
  • One-bedroom properties are very popular with first-time buyers and buy-to-let investors, spurred on by low interest rates and Help to Buy
  • Prime London property overall has risen by 1.6% in the past quarter, 10.3% in the past year

 The average value of one-bedroom properties in Prime London has risen by over £60,000 in the past year, following a 14% annual growth, according to estate agent Marsh & Parsons’ latest London Property Monitor.

The bulk of this increase was gained in the last three months, after a strong 6% quarterly rise increased the average value of one-bedroom properties by an extra £29,140. This follows three strong quarters of growth in the past year, contributing to a 14% annual growth – equivalent to £62,063 in a year.

The average price of a one-bedroom property in Prime London now stands at £502,139. In Prime Central London, covering the most expensive areas of Chelsea, Kensington, Notting Hill, Holland Park and Pimlico, the average value of a one-bedroom property has risen to £583,036 – a 9% increase in the last year, equivalent to £48,703 in a year.

Peter Rollings, CEO of Marsh & Parsons, comments: “With returns like these, it’s no surprise that people are queuing up to buy Prime London property. Competition for one-bedroom properties in particular is fierce. Spurred on by the rapidly improved availability of mortgages and low interest rates, first-time buyers are flooding the market in competition for the best properties in this price bracket.

“In addition, one-bedroom properties generate the best rental yields, making them a popular purchase for buy-to-let investors. We have noticed many young, would-be buyers adopting more European attitudes to renting, with many choosing to become long-term renters, rather than saving up for a deposit. As a result, the value of one-bedroom properties in Prime London is shooting up the scale.”

One-bedroom properties have risen in value at a faster rate than properties of other sizes in Prime London. The overall rate of growth in Prime London, reflecting all sizes of property combined, was 1.6% in the past quarter and 10.3% in the past year.

By comparison, two-bedroom properties have appreciated by 10% in the last year in Prime London, and by 7% in Prime Central London. Three-bedroom properties have appreciated by 12% in the last year on average across both Prime and Prime Central London.

Property Type Breakdown

   

Prime Central London

Non-Central Prime London

All Prime London

1 Bed

 £     583,036

 £        429,756

 £        502,139

2 Bed

 £  1,302,125

 £        615,495

 £        895,770

3 Bed

 £  2,298,161

 £        923,559

 £     1,523,116

4 Bed

 £  2,925,556

 £     1,364,599

 £     1,976,985

Strong price growth continues

In Prime London as a whole, property values have continued to rise, with prices climbing by 10.3% in the past year and by 1.6% in the last quarter.

However, for the first time in five quarters, the more expensive areas of Prime Central London have outpaced Prime London as a whole by experiencing a higher quarterly rate of growth. The rate of growth in Prime London was 1.6% in Q3, while in Prime Central London this figure was 1.7%.

Prime London Property Price Movements

 

Average value

Quarterly Change

Annual Change

Prime London

£ 1,426,243

1.6%

10.3%

Prime Central London

£ 2,040,387

1.7%

8.2%

Supply and Demand

The number of registered buyers has increased by 6% in the last quarter, but for the first time this year, there has also been an increase in the supply of property to the market. While the volume of supply remains at a historic low – there are still 17% fewer properties on the market than at the same time last year – the ratio of supply to demand is beginning to stabilise.

Peter Rollings continued:The ratio of supply and demand is the key factor which determines prices on the London property market. While interest rates remain low, Prime London property will continue to be seen as an attractive investment opportunity for both UK and overseas buyers, and prices will remain high.

“However, rather than create a bubble, we may find that Help to Buy actually stabilises prices by encouraging first-time sellers to put their properties on the market and take their next step up the property ladder. For the past three quarters, a lack of available property has created a high premium for those on the market, but the gradual increase in supply, which we are beginning to see now, combined with the wide volume of property development taking place, may start to initiate more ‘normal’ market conditions.”

MARSH & PARSONS:

Average Price of Two Bedroom Property in Prime London could reach £1 million by early 2014

  • Two-bedroom properties in Prime London grew in value by 14% over the last year
  • There is currently an average of 18 buyers per property across Prime London as a whole
  • Two-bedroom properties are highly desirable for both young professionals and investors alike

The average price of a two-bedroom property in Prime London could reach £1 million by March 2014 if prices continue to increase at the current rate, according to research from estate agent Marsh & Parsons.

Two-bedroom properties in Prime London appreciated by 14% during the last year, to reach a current average value of £909,203, according to Marsh & Parsons’ latest research.

If this rate of growth continues for the next three quarters, the average price of a two-bedroom property in Prime London will be £975,843 by the end of 2013 and £1,010,974 by the end of the first quarter of 2014.

Two-bedroom properties experienced a much faster rate of growth than other types of properties in the three months to June 2013, with a 6% increase from the previous quarter.  The slowest quarterly growth was among four-bedroom properties, the average price of which appreciated by a relatively modest 3% during the last quarter.

Peter Rollings, CEO of Marsh & Parsons comments:Compared to the rest of the country, Prime London property prices may seem high, but the figures don’t tell the whole story. There is of course a huge variation between different areas in Prime London. Very high value and high demand areas such as Kensington & Chelsea lift up the overall average figures, but there are still many areas of Prime London which represent better value for money. As a result, we’re seeing many young couples and first-time buyers heading to parts of South and South West London in search of more space for their money.

“In addition, the dramatic price increases we’ve seen in the last year bear witness to the rapidly improved availability of mortgages and wider signs of economic recovery which have helped to clear the bottleneck of those who were waiting for the right time to purchase property. But over the coming year, we expect the rate of growth to stabilise in most areas as the Prime London property market returns to normal.”

Marsh & Parsons calculated the average price using the mean average value of all the two-bedroom properties in a mix-adjusted, representative basket of properties across the areas of Chelsea, Kensington, Notting Hill, Holland Park, Pimlico, Clapham, Balham, Battersea, Barnes, Pimlico, Little Venice and Brook Green.

In Prime Central London – including just the areas of Chelsea, Kensington, Notting Hill, Holland Park and Pimlico – the average price of property has already passed the £2 million mark.

An imbalance of supply and demand is contributing to higher prices. During the last quarter, 11% more buyers entered the market in competition for 14% fewer properties. A total of 18 buyers per property were recorded.

The shortage of housing stock on the market has also resulted in demand for property rippling out from the centre. As a result, property prices in less central areas such as Clapham, Balham and Battersea are also increasing rapidly. In Q4 2012, an average two-bedroom property in Prime Central London cost 48% more than the average two-bedroom property in Prime London as a whole. In Q1 2013 this discrepancy narrowed to 45% and in the last quarter the gap closed to just 40%.

 

Marsh & Parsons: The Price of a London Garden

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As Summer fast approaches, with the sun smiling brightly on London and the prospect of the 100th Chelsea Flower Show just around the corner, attention is swiftly turning to the attraction of a London garden.

According to Marsh & Parsons research, two comparable properties in the same area could vary greatly in price due to the impact of a garden or an outside terrace. A well situated, sunny facing garden can significantly boost the price of a London property, compared to one without, by as much as 20% or more. As the weather improves the importance of a garden or alfresco space such as roof terraces, balconies and gardens becomes an essential “must-have” for buyers.

If we place Notting Hill under the microscope, striking discrepancies exist between property types, specifically those which boast attractive outdoor space. For instance, this two-bedroom property with an outdoor patio garden (http://www.marshandparsons.co.uk/property-for-sale/2-bedroom-Flat-for-sale/Leamington-Road-Villas-London-W11/NKN130088) is £30,000 more expensive than another comparable two bedroom property in the same building (http://www.marshandparsons.co.uk/property-for-sale/2-bedroom-Flat-for-sale/Leamington-Road-Villas-London-W11/NKN130089). That represents a premium of around 5% for a property of relatively the same size, on the same floor and in the same building and primarily due to one having a private balcony.

Marsh & Parsons research suggests that outside space can boost the value of a property by as much as 10%, especially in affluent areas, such as Chelsea where house prices are enjoying the effects of a buoyant market. 

In other popular areas of London, gardens and roof terraces can even add a 30% premium. In Fulham for example, two properties in the exact same neighbourhood (both by Lillie road) see a vast difference in pricing. If we compare a two bedroom property costing £470,000 (http://www.marshandparsons.co.uk/property-for-sale/2-bedroom-Flat-for-sale/Humbolt-Road-London-W6/FUL120176)to the same sized property with a roof terrace, the price soars up to £650,000 (http://www.marshandparsons.co.uk/property-for-sale/2-bedroom-Flat-for-sale/Mirabel-Road-London-SW6/FUL120182). That equates to a substantial 38% premium for the property which includes a roof terrace.

Peter Rollings, CEO of Marsh & Parsons, said:

“Gardens and roof terraces can instantly add value to a property. It is more difficult to sell a house without a garden, especially in the middle of a pleasant summer. As the sun beams across London, and people warm to the prospect of BBQs and outdoor socialising, people treat a garden as an essential part of a Londoners lifestyle.”

 

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